Stan Pate vows to appeal $2 million verdict in Townes of North River case

Stan Pate says he is appealing a $2 million judgement against him.

Staff file photo | The Tuscaloosa News

By Stephanie TaylorStaff Writer | The Tuscaloosa News

Published: Monday, September 30, 2013 at 10:00 p.m.

Last Modified: Monday, September 30, 2013 at 10:28 p.m.

A Tuscaloosa County jury has returned a $2 million judgment against businessman Stan Pate, finding that he interfered in a real estate developer's business agreement.

The jury rendered its verdict late Friday afternoon in favor of Chris Hayslip, one of the developers of the Townes of North River subdivision.

Hayslip filed a civil suit against Pate in 2009, claiming that he interfered in his business relationship with the other developers of the subdivision.

According to court documents, Hayslip owned 70 percent interest in the Townes of North River Development Co., which is the limited liability corporation he formed with Harlan Homebuilders in 2005. Harlan Homebuilders is a corporation formed by husband and wife Chris and Teresa Dobbs.

The Dobbses borrowed money from Pate and signed a loan agreement that transferred half of their 30 percent interest in the Townes of North River to Pate, Hayslip's attorneys wrote in court documents.

That violated the agreement between Hayslip and Harlan Homebuilders that required the parties to first offer their interest in the company to the other partners, according to court documents.

Members of the LLC were required to notify the other members and reveal details of offers of ownership made by outside parties, according to that agreement.

The loan agreement between Pate and the Dobbses also stated that Pate would receive half of any proceeds from a suit the Dobbses were planning to file against Hayslip.

That suit was filed in 2008 and involved numerous disputes between the parties, chiefly the allegation that Hayslip modified the original operating agreement to give himself 70 percent ownership without the Dobbses' knowledge. The original agreement was 50-50, they claimed in the suit. They also claimed that Hayslip misrepresented the value of the development as $14.8 million instead of the appraised value of $12 million during mediation that occurred before the suit was filed. Tuscaloosa County Circuit Court Judge John England dismissed that case, citing Alabama Civil Court Mediation Rules that prohibit courts from receiving information about positions taken by parties during mediation proceedings, facts presented during proceedings or the reason why a mediation process may have failed.

Hayslip's attorneys wrote in court documents that Pate financed the Dobbses' suit and that he attended court hearings without making known his connection to the Townes of North River Development Co. LLC.

Pate, however, said that he did not have interest in ownership of the corporation. He said that he only had a security interest on the property, and would have only taken possession if the Dobbses defaulted on their loan. Pate said that he loaned $100,000 to the Dobbses, including $25,000 to fund the 2008 lawsuit against Hayslip.

“I vehemently stand by being totally innocent,” Pate said Monday. “I loaned somebody money to help them because they couldn't get a distribution from the majority partner, and I would do the same today. If the verdict stands, it will deter people from helping other people who get into trouble.”

England also presided over the case between Hayslip and Pate but has not issued a final order.

“I would recommend that they not break out the expensive champagne just yet,” Pate said. “We're respectful of the courts and respectful of the judge. We obviously believe that the jury got it wrong. That's why the appellate courts are so important, if necessary.”

Jurors heard evidence in a trial that began Sept. 9 and concluded with the verdict Friday afternoon. They agreed that Pate had intentionally interfered with the operating agreement of the Townes of North River Development Co. LLC and that he interfered with the business relationship between Hayslip and the corporation.

The jury awarded Hayslip compensation of $279,751 in attorney's fees and $223,750 for emotional distress. They awarded him an additional $1,496,499 in punitive damages, bringing the total against Pate to $2 million.

The Townes of North River is a 162-acre development just east of Munny Sokol Park and west of Rice Mine Road that includes single-family homes ranging from smaller cottages to “estate” homes on larger lots.

<p>A Tuscaloosa County jury has returned a $2 million judgment against businessman Stan Pate, finding that he interfered in a real estate developer's business agreement.</p><p>The jury rendered its verdict late Friday afternoon in favor of Chris Hayslip, one of the developers of the Townes of North River subdivision.</p><p>Hayslip filed a civil suit against Pate in 2009, claiming that he interfered in his business relationship with the other developers of the subdivision.</p><p>According to court documents, Hayslip owned 70 percent interest in the Townes of North River Development Co., which is the limited liability corporation he formed with Harlan Homebuilders in 2005. Harlan Homebuilders is a corporation formed by husband and wife Chris and Teresa Dobbs. </p><p>The Dobbses borrowed money from Pate and signed a loan agreement that transferred half of their 30 percent interest in the Townes of North River to Pate, Hayslip's attorneys wrote in court documents.</p><p>That violated the agreement between Hayslip and Harlan Homebuilders that required the parties to first offer their interest in the company to the other partners, according to court documents. </p><p>Members of the LLC were required to notify the other members and reveal details of offers of ownership made by outside parties, according to that agreement.</p><p>The loan agreement between Pate and the Dobbses also stated that Pate would receive half of any proceeds from a suit the Dobbses were planning to file against Hayslip. </p><p>That suit was filed in 2008 and involved numerous disputes between the parties, chiefly the allegation that Hayslip modified the original operating agreement to give himself 70 percent ownership without the Dobbses' knowledge. The original agreement was 50-50, they claimed in the suit. They also claimed that Hayslip misrepresented the value of the development as $14.8 million instead of the appraised value of $12 million during mediation that occurred before the suit was filed. Tuscaloosa County Circuit Court Judge John England dismissed that case, citing Alabama Civil Court Mediation Rules that prohibit courts from receiving information about positions taken by parties during mediation proceedings, facts presented during proceedings or the reason why a mediation process may have failed.</p><p>Hayslip's attorneys wrote in court documents that Pate financed the Dobbses' suit and that he attended court hearings without making known his connection to the Townes of North River Development Co. LLC.</p><p>Pate, however, said that he did not have interest in ownership of the corporation. He said that he only had a security interest on the property, and would have only taken possession if the Dobbses defaulted on their loan. Pate said that he loaned $100,000 to the Dobbses, including $25,000 to fund the 2008 lawsuit against Hayslip.</p><p>“I vehemently stand by being totally innocent,” Pate said Monday. “I loaned somebody money to help them because they couldn't get a distribution from the majority partner, and I would do the same today. If the verdict stands, it will deter people from helping other people who get into trouble.”</p><p>England also presided over the case between Hayslip and Pate but has not issued a final order.</p><p>“I would recommend that they not break out the expensive champagne just yet,” Pate said. “We're respectful of the courts and respectful of the judge. We obviously believe that the jury got it wrong. That's why the appellate courts are so important, if necessary.”</p><p>Jurors heard evidence in a trial that began Sept. 9 and concluded with the verdict Friday afternoon. They agreed that Pate had intentionally interfered with the operating agreement of the Townes of North River Development Co. LLC and that he interfered with the business relationship between Hayslip and the corporation.</p><p>The jury awarded Hayslip compensation of $279,751 in attorney's fees and $223,750 for emotional distress. They awarded him an additional $1,496,499 in punitive damages, bringing the total against Pate to $2 million.</p><p>William Rutledge of the Birmingham law firm Rutledge & Yaghmai represented Hayslip. Rutledge declined to comment Monday morning.</p><p>The Townes of North River is a 162-acre development just east of Munny Sokol Park and west of Rice Mine Road that includes single-family homes ranging from smaller cottages to “estate” homes on larger lots.</p><p>Reach Stephanie Taylor at stephanie.taylor@tuscaloosanews.com or 205-722-0210.</p>